- The World Bank projected that Nigeria’s economy will grow by 3.6 per cent in 2025
- It said the country’s inflation rate would ease to 22.1 per cent in 2025, and a rise in Nigeria’s current account
- The World Bank said the naira remains one of Africa’s weakest currencies
The World Bank projects that Nigeria’s economy will grow by 3.6 per cent in 2025, building upon an estimated 3.4 per cent growth in 2024.
It added that the growth is expected to strengthen to 3.8 per cent in 2026 and 2027 if reforms implementation is sustained.
The growth projection was contained in the World Bank’s Spring 2025 edition of Africa’s Pulse, noting the impact of economic reforms in stabilising the macroeconomic environment.
The World Bank’s projection differs from that of the International Monetary Fund (IMF), which revised Nigeria’s 2025 growth downward to 3.0 per cent from 3.2 per cent, and projected a further decline to 2.7 per cent in 2026.
According to the Bank, the projection is based on improved non-oil sectors’ performance, particularly services such as financial services, telecommunications, and information technology, a slowdown of inflationary pressures, and improved crude oil production.
“Economic growth is expected to remain moderate in Nigeria. It is expected to increase from 3.4 per cent in 2024 to 3.6 per cent in 2025, and slightly increase to 3.8 per cent in 2026–27.
“The gradual recovery of the Nigerian economy along the forecast horizon is driven primarily by the service sector—specifically, finance, information and communications technology services, and transportation—and, to a lesser extent, a rebound in oil production that converges to its OPEC+ quota,” the report stated.
World Bank says inflation to ease to 22.1% in 2025
Differing from the IMF’s forecast, the World Bank projected that Nigeria’s inflation rate would ease to 22.1 per cent in 2025, down from 26.6 per cent in 2024, and further moderate to 15.9 per cent by 2027.
The World Bank based its projections on the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) in January 2025, which saw the base year change from 2009 to 2024.
The IMF, on the other hand, projected that Nigeria’s average inflation would surge to 26.5 per cent in 2025 and further rise to 37.0 per cent in 2026.
The IMF attributed the surge to structural inefficiencies, high exchange rate pass-through, and lingering cost pressures, despite reforms aimed at stabilising the economy.
Recall that the inflation rate eased to 24.48 per cent in January 2025 from 34.80 per cent in December 2024, following the rebasing of the CPI.
The rate further reduced for the second consecutive month to 23.18 per cent in February before rising to 24.23 per cent in March.
Naira remains one of Africa’s weakest currencies – World Bank
The World Bank further noted that the naira remains one of the weakest African currencies in 2024, having lost over 40 per cent of its value, alongside the South Sudanese pound and Ethiopian birr.
The depreciation followed exchange rate reforms of the government, which aimed to unify and liberalise Nigeria’s multiple foreign exchange windows.
With the government’s exchange rate unification, which allowed for market forces to determine the exchange rate on a willing-buyer-willing-seller model, there has been an improvement in FX liquidity and a reduction in naira volatility.
The World Bank lauded the reforms for creating a more predictable macroeconomic environment, which is expected to support growth and ease inflationary surge over time.
World Bank predicts a rise in Nigeria’s current account
According to the World Bank, Nigeria’s current account surplus is expected to rise from 9.2 per cent of GDP in 2024 to 9.4 per cent by 2026, driven by reduced imports, increased remittances, and improved oil export earnings.
The IMF predicted a reduction in current account surplus to 6.9 per cent in 2025 and 5.2 per cent in 2026, hinged on potential downside risks from global oil prices and external demand.
According to recent data by the Central Bank of Nigeria (CBN), Nigeria recorded a Balance of Payments surplus of $6.83 billion in 2024, the first in three years.
The increase was driven by a $17.22 billion surplus in the current and capital account, supported by a goods trade surplus of $13.17 billion.
JP Morgan warned that Nigeria’s current account may reverse to a deficit if oil prices continue to be sustained below Nigeria’s fiscal breakeven of $60 per barrel.
Fitch Ratings, on the other hand, projected that Nigeria’s current account, estimated at 6.6 per cent of GDP in 2024, would moderate to an average of 3.3 per cent of GDP in 2025 and 2026, supported by improved refinery projects and reforms in the country’s energy sector.
World Bank, IMF laud Nigeria’s economic reforms, but warn of risks
Both the World Bank and the IMF lauded Nigeria’s tough macroeconomic reforms, including the removal of fuel subsidies, the stoppage of Central Bank deficit financing, and the unification of exchange rates.
They say the reforms have long-term potential to restore fiscal sustainability and investor confidence.
The IMF, however, remains cautious of attendant risks, stressing persisting inflation and stagnating income per capita.
It projects real per capita income to grow by just 0.6 per cent in 2025, an indication of minimal gains in individual income levels despite overall growth.
World Bank projects 3.6% GDP growth in 2025, 2026, inflation decline in Nigeria
Meanwhile, TheRadar earlier reported that the World Bank projected that Nigeria’s economy will grow by 3.6 per cent in 2025 and 2026 due to expected economic stability following ongoing reforms by the Federal Government.
This was contained in the Global Economic Prospects, January 2025 report of the World Bank, published on Thursday, January 16.
